Federal agencies such as the SEC are required to publish agendas of the regulations that are under development or review. To satisfy that requirement, the SEC typically releases short-term and long-term “Reg Flex” agendas. The items included on those agendas – and those left off – provide insight into the agency’s priorities for the foreseeable future. The first Reg Flex agendas issued under Chair Gary Gensler were recently published and reflect many of the priority areas that he has already identified in speeches, testimony before Congress and elsewhere. This first article in a two-part series covers the components of the latest Reg Flex agendas and the key factors driving the items on those agendas. The second article will discuss the key agenda items for private fund managers and the rulemaking process in general, including criticism by Commissioners Hester M. Peirce and Elad L. Roisman of Gensler’s apparent plans to reopen recently completed rules. For our coverage of prior Reg Flex agendas, see “Former OCIE Official Discusses SEC’s Latest Reg Flex Agendas” (Sep. 24, 2020); “Key Takeaways for Private Fund Managers From SEC’s Latest Reg Flex Agenda” (Aug. 15, 2019); and “SEC’s Reg Flex Agenda Promotes Transparency While Adding Potential Compliance Burdens” (Mar. 15, 2018). Read full article …

At the recent Morgan Lewis Advanced Topics in Hedge Fund Practices Conference, a panel of globally based Morgan Lewis attorneys, including partners Tomoko Fuminaga, Joel Seow, Alishia K. Sullivan and William Yonge, explored various aspects of the international hedge funds landscape. This article reviews the portions of the program devoted to sustainability and environmental, social and governance considerations in Europe, Asia and the Middle East. For coverage of the other elements of the global hedge funds landscape discussed in this panel, see our two-part series:  “Accessing Non‑U.S. Institutional Capital” (Jul. 8, 2021); and “Europe, Asia and the Middle East” (Jul. 15, 2021). Read full article …

The SEC Division of Examinations recently issued a pair of risk alerts: one covering principal transactions and cross trades; and the other covering wrap fee programs. The alerts reflect the SEC’s continuing focus on the importance of robust compliance programs, clear disclosures to clients and advisers’ fulfilment of their fiduciary duties – notably identification and mitigation of conflicts of interest. This article analyzes the commonalities between the alerts and their implications for advisers, as well as the specific deficiencies identified in each alert. See “SEC Continues to Focus on Cross Trades and Principal Transactions” (Apr. 16, 2020); and “Pay to Play, Revenue Sharing and Wrap Fees Remain on the SEC’s Radar” (Apr. 20, 2017). Read full article …

According to a survey of more than 300 hedge fund managers and investors, a majority of hedge fund managers are incorporating environmental, social and governance (ESG) factors into their investment processes, partly driven by investor demand. Those managers, however, face a number of challenges, including a variety of impediments to the creation of ESG products. The International Organization of Securities Commissions (IOSCO) recently released a consultation report, which examines those challenges. This second article in a two-part series explores investor education, impediments to the development of sustainable products and IOSCO’s recommendations and requests for input. The first article outlined the risk of greenwashing and the various regulatory approaches to sustainability-related practices and disclosures. For more on the aforementioned survey, see “Manager and Investor Interest in ESG Is Growing, According to Recent Global Hedge Fund Study (Part Two of Two)” (May 20, 2021). Read full article …

Diversity, equity and inclusion (DEI) is a key agenda item for alternative asset managers in 2021 and the foreseeable future. Recently, there has been a keen focus on what DEI means and why it is important but perhaps less discussion about the practical steps and actions that managers can take to improve diversity within their organizations and industry as a whole. To provide alternative asset managers with guidance on how to create a more inclusive work environment, the New York Alternative Investment Roundtable hosted a webinar, which featured Nasrine Ghozali, chief risk officer at Oasis Management; Imogen Rose‑Smith, co‑founder of Combinate Capital; and Tracy McHale Stuart, CEO of Corbin Capital Partners. This first article in a two-part series highlights the importance of DEI at both a firm and industry level; the value of a firm’s self-evaluating its DEI status and practices; and how firms can approach diversity training. The second article will provide tips for incorporating diversity into hiring practices; insights on addressing diversity in a firm’s investments; and regional efforts in the U.S. and Asia. For additional coverage of actionable steps toward diversity, see “Practical Guidance for Advisers Seeking to Foster Diversity and Inclusion” (Jul. 14, 2020). Read full article …